Perth’s new apartment market recorded its strongest quarter of sales since Q4 2021, with 412 apartments sold in Q1 2026 and a record quarterly sold value of $537 million, according to Urbis’ latest Apartment Essentials results.

Urbis said the March quarter result reflects strong, highly product‑specific demand across both ends of the market, from more attainable projects delivering at scale, through to premium stock being absorbed by equity‑rich downsizers.&nbsp;

David Cresp, Partner at Urbis, said the key story in Perth is not demand, it is the market’s ability to convert demand into delivered housing.&nbsp;

“This is the strongest sales quarter since Q4 2021, and it reinforces that demand in Perth is real and it’s local,” David Cresp said. “But the task now is delivery, turning that demand into projects that can actually be built and completed.”&nbsp;

[smartcode_project:default project_id=110291 project_image_fid=302785]

<h2>Affordable product leads, premium demand remains resilient</h2>

Sales in Q1 were led by more affordable projects, with The Boulevard (SKS Group) recording 115 sales in the quarter, the presentation noting this is only the second time a single project has surpassed 100 quarterly sales. The project was able to offer more affordable housing product right next to a train station.&nbsp;

Palmyra West (Finbar) also delivered strong results with 28 sales in Q1, following 84 sales in Q4, with an average price of under $800,000, underscoring depth of demand for well‑located, attainable new stock.&nbsp;

At the premium end, Urbis said downsizer demand is continuing, with the results highlighting Romeo (Applecross, Finbar) recording 75 sales and reaching almost 50% sold in one quarter.

Jual (Shenton Park, Celsius Property) also posted a strong quarter with 28 sales, reaching 39% sold in one quarter.

Urbis noted that Perth apartment demand is not speculative, not investor‑led, and not uniform, describing it as localised, often equity‑driven and highly product‑specific, a pattern reflected in the polarisation between strong “attainable” performers and premium downsizer product.&nbsp;

[smartcode_project:default project_id=148957 project_image_fid=364102]

<h2>Prices underpinned by costs, and the delivery risk is growing</h2>

Urbis said pricing pressure is cost not demand‑driven: construction costs and delivery risk are now a central constraint, with the results noting build costs remain elevated and volatile, and that energy, fuel and labour uncertainty weigh on feasibility.

David Cresp said a growing challenge for private Build‑to‑Sell developers is simply securing a builder in the current environment.

“Developers are really feeling the pressure from a building market that was operating at capacity and securing a builder is challenging,” David Cresp said, adding that even where a builder can be secured, “trying to get to the price that makes the development financially viable is incredibly challenging in the current market.”&nbsp;

Urbis’ broader WA commentary also notes that industry remains at or above capacity with lot and housing creation, and that many builders are limiting new sales to manage stretched workforces and fixed‑price contract pressures, conditions that flow directly into apartment feasibility and delivery timing.

[smartcode_project:default project_id=108869 project_image_fid=317905]

<h2>Supply: improving later, but still constrained, and Perth lags eastern benchmarks</h2>

While near‑term supply remains constrained, Urbis’ forecast shows completions lifting “Supply is forecast to be back above 1,500 apartments per annum for the first time since 2019”, with 1,775 completions forecast for 2026, and volumes remaining above that level over the following years.&nbsp;

Looking further ahead, completions are forecast to reach 2,500 in 2028, with the report noting 32% of that total is social/affordable, reflecting the role of government‑supported delivery in rebuilding the pipeline.&nbsp;

However, Urbis said Perth remains behind comparable markets on pipeline scale. In a national comparison of projects under construction, the report shows under construction Perth Build‑to‑Sell (BTS) at 3,446 apartments versus the Gold Coast at 7,922. Mr Cresp said “The challenge for Perth is how to we grow the delivery pipeline”.

Urbis’ conclusion is that Perth’s market is increasingly defined by product discipline and delivery certainty, with the research identifying “delivery certainty is key” and calling out builder risk and procurement models as core success factors, alongside “timing and staging”.&nbsp;

Joel Robinson

Perth apartment sales hit strongest pace since late 2021 as builder capacity tightens

<a href="https://www.apartments.com.au/developers/sammut-developments">Sammut Group</a> has secured development approval for its latest Brisbane apartment project, marking the Sydney developer’s next step in expanding its Queensland pipeline following the success of its debut Gold Coast development, Coast.

The approved project at <a href="https://www.apartments.com.au/new-apartments/44-glen-road-toowong-qld-4066">44 Glen Road, </a><a href="https://www.apartments.com.au/developments/toowong-qld-4066">Toowong</a> will deliver a 15-storey riverfront apartment building with 42 residences, significantly increasing the scale of the site’s previous approval for a smaller luxury scheme. Designed by Bureau^proberts, the development will comprise a mix of predominantly four-bedroom and two-bedroom apartments positioned to maximise Brisbane River and city views.

Sammut Director Julian Sammut said the group had been actively searching Brisbane for several years before identifying Toowong as the right fit.

“Brisbane was the right step for Sammut,” Sammut said.

“With the success of Coast we thought we should definitely look to do more in Queensland alone. We then pushed up to look at Brisbane. We've been looking for I'd say two to three years actually and it was hard to find the right location.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/f_auto,c_limit,w_1440,q_75/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/field/image/Screenshot%202025-12-23%20at%203.27.14%E2%80%AFPM.png?VersionId=dYAVIL7qdcGA8ojvkslSrLjczXFejSSx" />

Sammut said suburbs including New Farm and Teneriffe were considered before the group ultimately focused on Toowong due to its strong downsizer demographic and limited supply of developable riverfront land.

The site was acquired off-market after what Sammut described as a lengthy negotiation and planning process, with the developer pursuing an uplift to the original approval.

“We are DA approved now which is very exciting,” Sammut said.

“We've had our change approval come through and we've obviously doubled the height, 15 storeys plus rooftop. We've got 42 amazing apartments that are going to be coming to market soon.”

<img alt="Sammut makes Brisbane apartment play" data-entity-type="" data-entity-uuid="" src="https://res.cloudinary.com/dz9xllyip/image/fetch/c_scale,w_580,dpr_2.0,q_auto:good/https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202025-12-23%20at%203.27.26%E2%80%AFPM.png?VersionId=ohkRkY0dIZlqdfME2EZePsCQavRiBadE" />

Bureau^proberts said the design responds to Toowong’s evolving urban character, balancing contemporary apartment living with the area’s established residential identity.

“A place where traditional Queensland living has taken place for centuries; Toowong is seeing a shift of contemporary influence, commercial and retail hubs mixed with well-considered residential offerings – all the while maintaining its character and charm,” the architect noted in planning documents submitted to Brisbane City Council.

The architecture practice said the project’s form was shaped by its riverfront setting, flood considerations, neighbouring building scales, and view corridors.

“They said the mix of four and two-bedroom apartments capture the ‘fundamental qualities of Queenslander living,’ translated into the context of a contemporary subtropical building.”

The development sits just off Coronation Drive within walking distance of Toowong’s retail precinct and the upgraded Regatta ferry terminal, while also benefiting from proximity to the incoming green bridge connection to West End. Sammut said the accessibility and amenity offering were central to the site’s appeal.

The approval adds to growing residential activity along the Toowong riverfront, joining nearby projects including Consolidated Properties’ Monarch Residences and Spyre Group’s ARC Residences.

Sammut secures approval for debut Brisbane apartment development in Toowong

Developer Lanevick is heading back into Sydney’s apartment market after focusing more heavily on the luxury townhouse and terrace sector in recent years.

Lanevick, founded and directed by Steve Maroun, is expecting to receive approval in the coming months for a new apartment development in Gladesville, with the aim to launch it to the market later this year.

The 51-apartment project, designed by Studio Johnston, will comprise a mix of one-, two-, and three-bedroom apartments positioned toward the Hunters Hill downsizer market.

“Traditionally it’s been difficult for people in that market to downsize because there just hasn’t been the right product available,” Maroun said.

“We’re targeting buyers who might have 30 to 40 per cent of their house value sitting in the bank after downsizing.

“They still want good spacious entertaining areas, they still want quality design, but they also want flexibility and the ability to enjoy life a bit more after working hard for a long time.”

The project sits near Boronia Park and within close proximity to the Parramatta River foreshore, an area Maroun says offers more of a Hunters Hill lifestyle than a traditional apartment precinct.

“From a lifestyle perspective, it’s really more Hunters Hill than Gladesville,” Maroun said. “You’re close to the foreshore, close to parklands, and still connected back into the village precinct.”

From level four and above, apartments will capture water views&nbsp;toward Sydney Harbour. Communal amenity will include rooftop entertaining areas, wellness spaces, and a gym tailored toward owner-occupier buyers.

“We’ve really designed these apartments around that buyer coming from the Hunters Hill LGA and what they’re actually looking for in their next chapter.”

The proposed development has also been designed to respond to the changing character of the broader Gladesville town centre, where a growing number of mixed-use and residential proposals are expected to emerge over the coming years.

“Gladesville presented a rare opportunity to deliver a genuinely design-led residential project within an evolving lifestyle precinct, just moments from the growing Gladesville town centre, and we’ve approached the project with a strong focus on architecture, liveability and long-term community value,” Maroun said.

Maroun said Lanevick saw a first-mover advantage within the precinct as planning controls continue to evolve to accommodate greater housing density.

“We think there’s a real opportunity there that hasn’t really been serviced properly yet,” he said.

“There’s going to be a broader evolution of the whole Gladesville village precinct over time, particularly with more activation and mixed-use outcomes.”

The Venus Street proposal will include a commercial and retail component at ground level designed to contribute to that evolving streetscape activation.

“A big part of the thinking was how do you activate that area properly and create more vibrancy and amenity, which is what Hunters Hill has been looking for,” Maroun said.

Lanevick’s focus since 2020 has largely been on smaller-scale luxury townhouse and terrace developments. The developer recently completed Royale Randwick, also designed by Studio Johnston, where prices reached $3.65 million. The project was featured in the UDIA NSW 2026 Professional Development Prospectus and was also named a finalist for Development of the Year.

&nbsp;

Lanevick to cater for Hunters Hill downsizers with new Gladesville apartment development

Property developer One Living, backed by former Macquarie banker turned investment manager Chris Green’s investment firm, has unveiled plans to bring more institutional capital into housing to help address the national supply crisis.

The New York-based investor has focused his firm, GreenPoint Partners, on addressing the supply shortage hitting middle market housing in Australia.

It is backing the new One Living business to develop more than 1000 units along the eastern seaboard. The new firm is starting with a development on Mona Vale Road, on the border of Mona Vale and Pymble, in Sydney’s Northern Beaches, with around 140 apartments planned. They are eyeing off more sites across the city.

With cost pressures rising in the industry, One Living’s model is to be a vertically integrated developer-builder, so it can respond directly to the housing gap by removing the cost inefficiencies embedded in traditional residential delivery.

“We are building a platform designed to operate at scale and starting in a market where there’s a clear need for quality, attainable housing,” One Living joint managing director Joseph Scuderi said.

“It’s that missing middle – it’s that attainable end of housing… that’s what most Australians invest into and what Australians can actually afford.”

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="798dfa93-4941-4db6-a696-31e9dc18e81c" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.31.50%E2%80%AFPM.png?VersionId=mKBqi5C_DmeiXS.AtJkcR8LQIxqCqmFi" />

GreenPoint Partners brings years of experience assembling and scaling real estate operating businesses across major markets. And Green sees a big opportunity in Australia.

“For its size, sophistication and importance to the community, Australia’s living sector has remained largely under-institutionalised, which represents significant opportunity,” Green said. “GreenPoint identified that gap, assembled the right team, and is backing One Living to build a platform that is aligned to market needs.”

Green said being a builder-developer would give the company the capacity and flexibility it required to deliver reasonably-priced homes.

“We want it to be at that attainable level; not super high end luxury but at that attainable level,” he said.

<img alt="Mona Vale" data-entity-type="file" data-entity-uuid="74a5344a-4b26-4d4a-ada3-056b1220be77" src="https://s3.ap-southeast-2.amazonaws.com/www.urban.com.au/s3fs-public/inline-images/Screenshot%202026-05-28%20at%202.32.15%E2%80%AFPM.png?VersionId=vY8hXHO4reBMdO8ZXMWCNtGZJofUPQ3j" />

&nbsp;

One Living will undertake a component of affordable housing in its schemes, which it will own and operate, and it could also run build-to-rent on some sites.

Green praised local policy settings.

“The NSW government is being very supportive, strategic and pragmatic in terms of how do we generate more supply of housing,” he said. “We think it’s actually positive for development and the bit that’s been lacking at that attainable level is that it’s lots of relatively small private developers, whereas we want to create an institutional platform.”

One Living is also&nbsp;looking at high-density projects and could take on more institutional funding in the future.

“The way we will be able to achieve economies of scale is through size,” Green added.

One Living enters Sydney's new apartment market with Northern Beaches site acquisition

It's been several years since there's been an opportunity to buy a brand new townhome in Melbourne's coastal suburb of Mordialloc. Even apartment developments in recent times have been few and far between in the area.

Local developer LDS Property identified the gap in new housing, securing a site on White Street, directly opposite&nbsp;Woodlands Golf Club Mordialloc. They've recently launched&nbsp;<a href="https://www.apartments.com.au/new-townhouses/wm-residences-mordialloc-102-white-street-mordialloc-vic-3195">WM Residences</a>, just 13 townhouses which they have already started building.

Projects by Buxton Director Heath Thompson, who is selling WM Residences, says the townhouses x that perfect middle ground be

"Mordialloc residents have had limited options to downsize within the suburb, often forcing them to look elsewhere despite long-standing ties to the area," Thompson says.

"With very little comparable new supply coming to market, projects like WM Residences are well placed, particularly as buyers look to capitalise on current conditions amid constrained supply."

[smartcode_project:default project_id=134646 project_image_fid=6109]

The development, designed by regarded architecture firm&nbsp;<a href="https://www.apartments.com.au/architects/ewert-leaf">Ewert Leaf</a>,&nbsp;adopts a deliberately restrained architectural approach, focusing on simplicity, durability and liveability rather than overt design gestures.

The boutique scale is central to the offering. With only 13 three-bedroom residences, each home is configured to prioritise functional layouts and everyday use, supported by private terraces and secure two-car garages.

Ewert Leaf’s design response leans into a calm, neutral material palette. Interiors are defined by oak flooring, white walls and soft finishes, creating a consistent and understated backdrop. The approach avoids trend-driven detailing in favour of longevity, with an emphasis on natural light and spatial clarity.

[smartcode_project:default project_id=134646 project_image_fid=6110]

Beyond aesthetics, the homes are designed to meet contemporary performance expectations. Each residence targets a minimum 6-star energy rating, incorporating double glazing, comprehensive insulation and all-electric Bosch appliances.

The project’s location supports a walkable coastal lifestyle, sitting within close proximity to Mordialloc’s foreshore, Main Street retail strip and the train station. Local cafés and dining venues, including Suburbia Deli and Hendriks Café, are within a short walk, reinforcing the area’s established neighbourhood character.

[smartcode_project:default project_id=134646 project_image_fid=6116]

While <a href="https://www.apartments.com.au/developments/mordialloc-vic-3195">Mordialloc</a> is often defined by its beach and pier, the project taps into other areas of day to day living, offering easy access to local food, casual dining and transport, rather than positioning itself purely as a lifestyle retreat.

WM Residences reflects a continued trend across Melbourne’s coastal suburbs towards smaller-scale, design-led townhouse developments, particularly on infill sites where proximity to amenity is already established.

With construction commenced prior to its market entry, the project aligns with a growing preference among buyers for developments with visible progress and defined delivery timeframes.

[smartcode_project_cta:default project_id=134646]

WM Residences fills gap in Mordialloc townhouse market

Housing Affordability

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<img src="https://counter.theconversation.edu.au/content/75130/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
Climbing house prices seem to scare people but houses are relatively more affordable today than they were in 1990, it’s actually interest-rate risk that’s the bigger problem for first home buyers.
If you look at latest numbers on house prices, as a measure of affordability, they use a “median measure” – that is, the ratio of median house price to median salary. According to the latest Demographia survey, the price of the median Sydney house is 12.2 times the median salary, and it is 9.5 in Melbourne.
But it’s simply misleading to compare median-based measures of housing across different time periods in the same location. These simple median measures do not take into account differences in interest rates in different time periods. 
A house in 2017 that costs nine times the median salary, when mortgage interest rates are less than 4%, is arguably more affordable than a house in 1990 that costs six times the median salary. Interest rates in 1990 were 17 percent.
Consider this simple example. In 1990 a first home buyer purchases an average house in Sydney priced at A$194,000. With mortgage interest rates at 17 percent, the monthly mortgage repayments were A$2,765 for a 30-year mortgage.
But in 1990 the average full-time total earnings was only A$30,000 per annum, so the buyer’s mortgage repayments represented over 111 percent of before-tax earnings. In 2017 a first home buyer purchasing a Sydney house for A$1,000,000, with interest rates at 4 percent, is only required to pay A$4,774 every month, or 69% of their before-tax average full-time total earnings. 
So, relatively, houses are substantially more affordable today than they were in 1990. The lower interest rate means the costs of servicing a mortgage is lower today than it was 25 years ago, or even 50 years ago. 
However, those lower interest rates also mean today’s first home buyers face greater perils than their parents or grandparents.
<h2>Interest-rate risk</h2>
Interest rate risk is the potential impact that a small rise in mortgage interest rates can have on the standard of living of homeowners. This does not consider the likely direction of interest rates, rather how a 1 percent change in interest rates affects the repayments required on a variable rate mortgage.
When interest rates rise so do mortgage repayments. But the proportional increase in repayments is higher when interest rates are lower. For example, if mortgage interest rates were 1 percent, then increasing interest rates by another 1 percent will double the interest costs to the borrower. When interest rates are higher, a 1 percent increase in interest rates will have a lower proportional affect on their repayments.
If we go back to the example from before, the interest rate risk of the first home buyer from 1990 is much lower than that of the 2017 buyer. If mortgage interest rates rose by 1 percent in 1990, repayments would rise by only 5.7 percent to $2,923. For the 2017 buyer on the other hand, a 1 percent increase in interest rates would see their repayments rise by over 12 percent to $5,368 per month. 
This has the potential to financially destroy first home buyers and, due to the high reliance of the retail banking industry on residential real estate markets, potentially create a systemic financial crisis. 
Interest rate risk has an inverse relationship to interest rates – when interest rates fall, interest rate risk rises. As a result, interest rate risk has been steadily increasing as mortgage interest rates have fallen. Given that we have record low interest rates at the moment, interest rate risk has never been higher.
<h2>Putting it all together</h2>
Compounding all of this is the general trend of interest rates. 
In 1990 mortgage interest rates were at a record high and so our first home buyer could reasonably expect their repayments to decrease in the coming years. They could also reasonably expect that, as mortgage interest rates fell, demand for housing would increase (all else being equal) and so would house prices, generating a positive return on their investment.
But our 2017 first home buyer is buying when interest rates are at record lows. They cannot reasonably expect interest rates will fall or for their repayments to go down in future years. It’s also unlikely that house prices will increase as they have for previous generations. 
So while the current generation of first home buyers find housing much more affordable than their parents, they face substantially higher interest-rate risk and a worse outlook for returns on their investment. If we wish to address the concerns of first home buyers we should look into these issues rather than exploiting misrepresentative median-based measures of house affordability. 
Apart from addressing issues with the supply of housing, governments need to investigate ways to reduce interest rate risk over the longer term.
Jamie Alcock is associate Professor, University of Sydney and author for The Conversation. He can be contacted <a href="https://theconversation.com/profiles/jamie-alcock-349860" target="_blank">here</a>.
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j.ballantyne1990-6AQqhLzZaK

Houses aren’t more unaffordable for first home buyers, but they are riskier

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<img src="https://counter.theconversation.edu.au/content/75060/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
As the federal budget approaches, the government is grappling with ways to enhance housing affordability, including reforming the current 50 percent capital gains tax (CGT) deduction on property investment.
The Economics Society of Australia (ESA) Monash Forum polled economists on this proposition:
"Capital gains tax deductions for housing investment should be removed because they overstimulate the housing market, contributing to rising house prices."
This is a deliberately more extreme measure than the proposal reportedly being considered by the federal government, which is to cut the current discount to 25 percent. But we wanted to assess more generally the effect of capital gains taxes on the housing market.
The poll found 44.4 percent of economists agreed with a statement that the tax deduction should be removed entirely (22.2 percent agreeing and 22.2 percent strongly agreeing). But 40.7 percent disagreed with the statement (22.2 percent disagreeing and 18.5 percent strongly disagreeing); while 14.8 percent of respondents were uncertain.
<a href="https://www.propertyobserver.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.10.49%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.10.49%20AM.png" alt="">
While some economists support the current role of the CGT discount to avoid taxing the capital gains that arise as a result of inflation increasing house prices, as opposed to the valuation in the land or property due to development (Saul Eslake, Rodney Maddock, Nigel Stapledon and Doug McTaggart), others believe the tax should also apply to the gains as a result of inflation (Kevin Davis and Margaret Nowak).
Many argued the principle of the CGT discount is not a bad policy, however the level of the discount is generous and is open for abuse.
They also pointed out that changes in one type of tax will distort the economy, especially if it is only targeted to one type of asset, in this case property. Instead some economists suggested the approach should be a holistic reform to fix tax inefficiencies, and tax treatment should be equal between all forms of investment and saving.
Most of the economists agreed housing affordability policies should be focused mainly on housing supply and housing market constraints (as well as transport and infrastructure) to solve the crisis. Other policies such as shared-ownership schemes and government-backed bonds are also being considered.
<h2>Capital gains tax</h2>
The capital gains tax (CGT) is calculated at the effective marginal tax rate of the investor, on the capital gains made at the time of sale of the asset. Investors who hold an asset for longer than 12 months receive a 50 percent discount on the CGT liability, at the time of sale. For superannuation funds, the discount rate is 33.3 percent.
Owner-occupiers are fully exempt from capital gains tax on the sale of their primary residence.
Some of the options reportedly being considered by the federal government include decreasing the CGT concession to 25 percent, decreasing it to 40% discount (as recommended in the Henry Tax Review) only for property investments, or some other reduction in the CGT discount for property investments.
Another option is completely removing the concession if the property is sold in the initial investment years; and phasing the discount in after the investment has been held for some specified number of years.
<h2>The economists’ arguments for and against</h2>
Economists who supported removing capital gains tax deductions for housing investment said the discount provides incentives to over-invest in property rather than other assets that provide income. So by eliminating or reducing the CGT discount, the cost of capital will increase and buyers will reduce their demand for property, resulting in lower, more affordable house prices.
Those who agreed with the statement argue any change in the CGT discount to address property speculation should also be accompanied by reforming negative gearing. They argue that eliminating the CGT discount for property only would push residential investors towards cheaper properties or towards investing in other assets that maintain the CGT discount. 
Most studies find no evidence of capital gains advantages being a main incentive for investors holding residential property. However it appears to be a small factor in the intention of investing in residential property.
Click to enlarge
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.13.22%20AM.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.14.00%20AM.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/24/Screen%20Shot%202017-03-24%20at%209.14.00%20AM.png" alt="">
Those against the statement argue the timing may not be right as the housing cycle is currently at its peak, and the double digit house price appreciation rates are only seen in the inner-ring suburbs of metropolitan cities and only for houses and not apartments.
Economists would expect to see only a short-term drop in house prices if the CGT deductions are eliminated, as investors switch away from property and into other assets. So the remaining residential investors in the market would purchase cheaper properties, potentially still crowding out first-home buyers.
They would also hold the property for a longer period. In the medium to long-term, the reduction in residential investment would impact on the new and existing supply of housing, resulting in housing shortage and rising house prices.
Maria Yanotti is lecturer of Economics and Finance Tasmanian School of Business &amp; Economics, University of Tasmania and author for The Conversation.
She can be contacted <a href="https://theconversation.com/profiles/maria-yanotti-349557" target="_blank">here.</a>
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jchancellor-FAypfDUnLy

Capital gains tax concession is too generous

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<img src="https://counter.theconversation.edu.au/content/75050/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
I didn’t think it was possible for there to be more focus on the Australian housing market than in 2016, but the last couple of weeks have proved me wrong.
ABS figures revealed that in the December quarter, across the eight major Australian cities, house prices rose 8.9 percent and apartment prices rose 4 percent. Those are stunning figures, particularly on the back of the huge rises of recent years.
This prompted renewed discussion about whether prices constituted a bubble. Many players weighed in, but former Liberal Party leader John Hewson put it most succinctly, saying on ABC’s Lateline:
“I think it’s a crisis, it is a bubble. I know people are hesitant in saying that, it is a bubble.”
In one sense it doesn’t really matter whether there is a housing bubble or not. Once buyers start believing there is and think it will burst, they have every incentive to wait to purchase. That dries up liquidity in the property market and sellers who need to sell are forced to take a steep discount. That justifies the buyers’ belief that prices are going to fall. And that, simply put, is how a bubble bursts.
Are we at that point yet? It’s hard to say, but given that a former Liberal Party leader, the ASIC chairperson, and the Secretary to the Treasury(among others) have said so recently, there is reason to think we might get there.
The most recent board minutes revealed the RBA was somewhat focused on housing as well. The minutes stated:
“Over recent months, conditions appeared to have strengthened in Sydney and had remained strong in Melbourne; these cities had continued to record brisk growth in housing prices, and auction clearance rates had remained high. Housing loan approvals and credit growth had picked up for investors, primarily in New South Wales and Victoria” and that this “continued to suggest that there had been a build-up of risks associated with the housing market.”
The minutes also noted a number of positive developments, from the terms of trade to the strength of our trading partners to business sentiment. The notable exception was the labour market which continued to confound understanding. The RBA noted that the key implication was that:
“Domestic wage pressures remained subdued and household income growth had been low, which, if it were to persist, would have implications for consumption growth and the risks posed by the level of household debt.”
It is difficult to assess the future path of the cash rate. The economy looks like it might be strengthening, and if business investment were finally to rebound, there would be a case for a rate rise. But with a weak labour market, a rise in rates would put the squeeze on those heavily indebted households. This could, in turn, detonate the property market. The nightmare scenario is that it has a big enough effect on bank balance sheets that they contract lending significantly, further hurting the property market.
This is the delicate tightrope the RBA is trying to walk.
The run-up in prices has put further focus on housing affordability. The Coalition have suggested they will announce a series of measures to address it in the budget. They are rumoured to be considering schemes like allowing first home buyers to access their superannuation – which is a very bad idea. It is another policy that fuels the demand side without addressing supply. I have said numerous times – including in my McKell Institute plan – that demand-side excesses such as negative gearing need to be curbed and the supply side needs to be encouraged.
The housing package might be the most interesting thing to look out for in the federal budget on May 9.
Richard Holden is professor of Economics and PLuS Alliance Fellow, UNSW and author for The Conversation.
He can be contacted <a href="https://theconversation.com/profiles/richard-holden-118107" target="_blank">here</a>.
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If it looks like a bubble and sounds like a bubble…

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Among the capital cities, Melbourne posted the largest through-the-year growth at 10.8 percent, with Sydney close behind at 10.3 percent.
House prices in both cities experienced strong growth in the December quarter, with house prices climbing 6.1 percent in Sydney and 6 percent in Melbourne. 
The mean price of dwellings in Australia is $656,800.
The numbers immediately added fuel to the housing affordability debate.
Research by Ben Phillips, an associate professor of economics and public policy at the Australian National University, showed that while Sydney house prices have jumped 70 percent in the last five years, the average income growth has increased just 13 percent. His analysis was carried in the Huffington Post.
"This result comes at the same time that Australia is in a home construction super cycle, building more homes than ever before. The house price growth is largely related to investor activity in Sydney and Melbourne,” Phillips was cited as saying by the Huffington Post.
“Low interest rates and tax incentives such as negative gearing and capital gains tax discounts are likely adding extra fuel to price growth."
Treasurer Scott Morrison had earlier said there would be a housing affordability package in the May budget and NSW Premier Gladys Berejiklian has already said one of her main goals is housing affordability. 
The mean price of residential dwellings in NSW ($864,900) remains the highest in the country followed by Victoria ($690,100). 
<a href="https://www.propertyobserver.com.au/images/2017/03/21/ABSPropertyPrices.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/21/ABSPropertyPrices.png" alt="">
Perth continued to show weakness, with prices of attached dwellings falling 1.7 percent, followed by Brisbane (1.3 percent) and Darwin (2.5 percent), while prices rose in all other capital cities. The ABS defines attached dwellings that includes flats, units and apartments plus semi-detached, row and terrace houses.
The total value of Australia's 9.8 million residential dwellings increased $274.2 billion to $6.4 trillion. The mean price of dwellings in Australia is now $656,800.
<a href="https://www.propertyobserver.com.au/images/2017/03/21/ABSchart.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/21/ABSchart.png" alt="">
<a href="https://www.propertyobserver.com.au/images/2017/03/21/ABSHousingValue.png" target="_blank">Click to enlarge</a>
<img src="https://www.urban.com.au/images/2017/03/21/ABSHousingValue.png" alt=""> 
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jonathanchancellor-7SQnKwU6yx

National property prices up 4.1 percent in the December quarter 2016: ABS

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House price growth is typically regarded as a good thing. It creates a feel good wealth effect which triggers spending across the economy.
But the recent scenario from the Organisation for Economic Co-operation and Development casts that concept aside.
The Paris-based OECD said in its latest economic report that the single biggest threat to Australia is from rising house prices.
They suggested a recession was possible after a hard landing in the property market following our years of double-digit price gains.
Putting the risk of a recession at around one in five, the report said the residential market may not ease gently but develop into a "rout on prices and demand" especially given that households account for around half of Australia's total debt.
Their warning came a day after gross domestic product data showed the we'd avoided recession in 2016.
It also coincided with CoreLogic calculation that Sydney's price growth had firmed even further through February.
It now sits at an 18.4 percent annualised price growth with the house median a $895,000 and apartments at $685,000. 
The last time there was similiar growth in Sydney was in 2003 when prices jumped 17 per cent in 12 months to $454,000. Soon afterwards the Sydney market had crashed and then an extended price plateau set in.
Even further back was 1989 when Sydney prices jumped 24 percent in the wake of the 1987 stockmarket crash and bicentennial switch into property, that resulted in an horrific crash during our last recession. 
Normally house prices fall because of the impact of rising unemployment or rising interest rates. For the past few years there's been the looming spectre of fallout from an envisaged Chinese downturn, which hasn't eventuated.
But the OECD now suggests house prices could collapse because the ever increasing prices will trigger households into the realisation that they were carrying too much debt. Regulatory retraints will kick in too as a contributing factor.
It will create a downward spiral in economic activity that pushes up unemployment, accelerating mortgage defaults, and creating distressed bank balance sheets, turning what may have been an orderly "correction" in house prices into what the OECD warns could be a "rout".
The OECD did not nominate any timing on the tipping point.
And OECD has been at the misinformed bearish end of the forecasting spectrum for many years.
Despite the headlines that always come after their reports, the mum and dad home buyers and investors have stopped listening.
Driven instead by the fear of missing out or being on the sidelines given continuing price gains in Sydney.
The OECD's report does echo the Reserve Bank's recent unease over household indebtedness, which the new governor Philip Lowe considers could backfire into a spending slowdown.
But we aren't seeing any impact at Saturday property auctions. They've sat at 80 percent or higher for the past month.
This article was first published in the Daily Telegraph. 
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Can too much house price growth hurt the economy?

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<img src="https://counter.theconversation.edu.au/content/74233/count.gif?distributor=republish-lightbox-advanced" alt="The Conversation" width="1" height="1">
GUEST OBSERVER
The need for more affordable housing close to public transport and services is acute in Melbourne.
Inner Melbourne has experienced a 74 percent increase in rough sleeping <a href="https://www.theage.com.au/victoria/shocking-record-numbers-of-homeless-people-sleeping-on-melbournes-streets-20160609-gpf1wk">in </a>the past two years. This is perhaps the most visible outcome of the lack of affordable housing options. Only 1 percent of advertised rental properties in the metropolitan area are affordable for households reliant on government assistance.
Buying or renting in the well-serviced inner and middle suburbs is increasingly out of reach for households on low and moderate incomes. A month ago, one of us wrote an article in The Conversation bemoaning the lack of government leadership on this issue. In the 15 months since its election, the Victorian government had not delivered promised revisions to the Plan Melbourne metropolitan strategy or an affordable housing strategy.
What a difference a month makes. It is almost as if some government leaders read the article. Every week (or to be more precise, weekend) since then has delivered a major policy announcement.
Now that Plan Melbourne and Homes For Victorians have been delivered, it is only fair that we provide a preliminary evaluation of how well these strategies meet the housing needs of Victorians on moderate, low and very low incomes.
These documents remain vague about the definition of “affordable housing”. They also do not designate various income groups. We have taken the liberty of defining these groups based on median income brackets.
Moderate-income households
We define moderate income as 80-120% of area median income – about A$68,500-$102,500 a year. In this group, first home buyers appear to be the biggest winners in Plan Melbourne and Homes For Victorians.
The Victorian government will waive stamp duty for first home buyers on homes worth up to $600,000 and taper stamp duty concessions on homes above that price. This is set to cost the government $851 million over four years and save the average buyer $8,000.
However, if previous first home buyer incentives have taught us anything, this is likely to inflate the cost of cheaper dwellings without delivering affordability benefits.
The government is also offering a shared equity program. This allows first home buyers to co-purchase their home with the government. The initiative is intended to support households that qualify for a bank loan but need help saving a deposit. Western Australia has a similar program, which has helped more than 1,500 households buy homes to date.
Low-income households
This group earns 50 percent-80 prcent of area median income, in the range of $42,500-$68,500 a year.
As exciting as the above options are for some first home buyers, they are out of reach for low-income households that earn between $800 and $1,300 per week. These households are unlikely to qualify for social housing but struggle to afford market rent and purchase prices.
This group, which includes many service and trades workers and their families, need a steady stream of new, appropriately sized and affordable market rental options. However, neither the Housing for Victorians nor Plan Melbourne talks specifically about a new scheme to replace the National Rental Affordability Scheme, which the current federal government abandoned in 2013.
It is absolutely true, as the affordable housing strategy states, that federal policies like capital gains tax exemptions and negative gearing favour investors over first-time and other resident homebuyers. However, state government policies can have an impact on scaling up a rental housing market.
In other cities with similar housing affordability crises, such as Vancouver, New York and London, a combination of expedited approvals, development levy abatements, inclusionary zoning and other mechanisms have helped develop new below-market rental units. Located near public transport and services, these are usually provided at particular price points and kept affordable in perpetuity.
Very-low-income households
These households have income of less than 50 percent of the area median, or under $42,500. They are likely to be the primary beneficiaries of significant new social housing funding and development.
The Victorian government has set up a $1 billion fund to support new social housing. The government will work with community housing providers to deliver social housing through new construction and rental subsidies. This is estimated to deliver up to 2,200 new housing units over the next five years.
This funding injection is badly needed: Victoria has the lowest proportion of social housing stock in Australia.
The state government is also increasing funding, or providing new funding, for a Family Violence Housing Blitz, support for transitions out of homelessness, and rooming house renovation.
A new $1 billion loan guarantee fund for social housing providers will be linked to a shared social housing rent registry. This will make life a little easier for the 33,000 households on the public housing waiting list. They currently have to separately register with up to a dozen other community housing providers.
Plan Melbourne has identified a policy direction to use surplus government land to develop social and affordable housing. Launch Housing and VicRoad’s proposal for Ballarat Road in Maribyrnong offer an example of how these partnerships might work. Plan Melbourne also focuses on increasing the supply of social housing through regeneration and intensification of existing public housing sites.
However, the strategy does not recommend a level of social housing as a proportion of total existing and new housing stock. To provide for all households now eligible for social housing, Victoria would require 76,000 more social housing units. By 2051, that figure is projected to increase to 140,000
Furthermore, Plan Melbourne projects a need for 1.6 million new homes in the next 30 years. That’s over 50,000 new homes a year. Of these, 5,000 would be required to meet the needs of low-income seniors, people with intellectual and physical disabilities, female-headed households escaping family violence, and others who simply cannot compete in the private rental market.
Now to make these plans work
 
 
The Andrews government has new housing and planning strategies, but has more to do to ensure they work. Tracey Nearmy/AAP
Plan Melbourne and Homes For Victorians provide several directions that could benefit all Victorians. Welcome aspects include greater emphasis on public transport networks, greater diversity of housing options, 20-minute neighbourhoods and practical mechanisms to get more housing closer to public transport and services.
The plans also make very encouraging noises about strengthening the role of planning in helping to deliver social and affordable housing. This includes overcoming the legislative and definitional barriers to the effectiveness of mechanisms like density bonuses or inclusionary housing.
The continuing lack of formal definition of affordable housing is a fundamental flaw in Victorian affordable housing policy that remains unsolved by Homes For Victorians and Plan Melbourne.
Plan Melbourne and Homes for Victorians together provide some welcome directions towards more well-located and affordable housing. But the previous Victorian planning strategy, Melbourne 2030, foundered in implementation.
Victoria will have to link infrastructure improvements to specific affordable housing targets in well-serviced areas. And the government should continue its work on value capture and development contributions to nail down implementation of its long-awaited affordable housing strategy.
Katrina Raynor is postdoctoral research fellow, Transforming Housing Project, University of Melbourne and can be contacted <a href="https://theconversation.com/profiles/katrina-raynor-255374" target="_blank">here</a>.
Carolyn Whitzman is professor of Urban Planning, University of Melbourne and can be contacted <a href="https://theconversation.com/profiles/carolyn-whitzman-9944" target="_blank">here</a>.
Both are authors for The Conversation.
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What a difference a month makes, but Victoria can still do more to get housing and planning right

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The median house price across Australian capital cities has increased by 4.1 per cent for houses and 2.1 per cent for other dwellings, according to the latest data from the Real Estate Institute of Australia, adding to the debate about housing unaffordability.
The weighted average median house price for the eight capital cities was $743,496, according to the REIA Real Estate Market Facts for the December quarter 2016. 
The REIA had recently said that record low interest rates have failed to ease housing woes, with New South Wales leading the decline in affordability across all states in the December quarter of 2016. The RBA has voiced its concern several times, while the NSW Premier Gladys Berejiklian has said housing affordability is "the biggest issue people have across the state".
REIA president Malcolm Gunning said over the year, the median house price increased in all capital cities except Perth and Darwin, reflecting the differing fortunes of state economies. 
“At $1,134,075, Sydney’s median house price is the highest among the capitals whilst Hobart retains the lowest at $430,000 - the figure is 42.2 per cent lower than the national average,” Gunning said.
“The median price for other dwellings increased to $572,254 as median prices increased in Sydney, Melbourne, Hobart and Darwin.
While Hobart and Adelaide had the lowest median prices over the quarter, Hobart had the largest increase in both the median price for houses at 6 per cent and 11.7 per cent for other dwellings.
Both investor finance and owner-occupied housing finance (excluding re-financing) also showed strong increases of 8.8 per cent and 11.1 per cent respectively, after small decreases in the previous quarter, said the REIA.
“The level of investor activity is not unexpected when you consider that 10-year average annual returns for residential investment property range from a low of 6.5 per cent for houses in Perth to 10.5 per cent for two-bedroom units in Sydney with most returns being around 8 per cent. 
“This tells us why property is favoured above other forms of investment,” Gunning said. 
Median rents for houses during the quarter remained steady or increased in all capital cities except Darwin.  Median rents were steady in Brisbane, Adelaide and Perth. Canberra had the largest increase at 9.5 per cent followed by Hobart with a rise of 6.1 per cent. Median rents for other dwellings remained steady or increased in most capital cities except for Sydney, Perth and Darwin. In Melbourne and Canberra, median rents for other dwellings remained steady.
“The weighted average vacancy rate for the eight capital cities decreased to 2.9 per cent during the December quarter, a decrease of 0.2 percentage points. In most capital cities, the vacancy rates dropped by between 0.1 to 0.2 percentage points. In Hobart, the vacancy rate remained steady while in both Darwin and Canberra it increased. Darwin and Perth continue to have the highest vacancy rates at 7.8 per cent and 6.4 per cent respectively.
 
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Median house prices across capitals up 4 percent in December quarter: REIA

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Westpac Banking Corp chief executive Brian Hartzer says the RBA faces a difficult challenge.
They had to, on the one hand, support parts of the economy with low interest rates, while avoiding a housing price bubble, he told The Australian Financial Review's Chanticleer column.
Hartzer advised he does not believe Australia is in the midst of a housing asset bubble.
He says there is no evidence in Westpac's housing lending data that investors are buying houses for a "quick flip" to another buyer.
But he says Michele Bullock's recent comments highlight the need for action by local and state governments to ease the barriers to new housing development.
He thinks there needs to be co-ordinated policy action to fill the demand supply gap.
Hartzer indicated he was not a surprise to Hartzer on why Chinese nationals would want to live in Australia and take advantage of the high quality standard of living, including the education system.
He says foreign investment has been a feature of Australia for many years and continues to support the financing of new unit developments which, in turn, helps to resolve the lack of supply in the residential market.
Hartzer thinks the capital controls in China will eventually have an impact on the amount of money being invested in the Australian housing market.
Fresh data shows foreign buyers were responsible for purchasing about 11 percent of NSW homes, with Chinese buyers accounting for 32 percent of these buyers.
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There's no housing bubble: Westpac chief Brian Hartzer

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GUEST OBSERVER
The announcement by NSW Labor that in government they would lift surcharges for foreign investors on residential homes will slow down the supply of new homes.
Sydney needs more housing supply not less.
So Labor’s proposal to lift the stamp duty surcharge from 4 percent to 7 percent and to double the Land Tax surcharge for foreign investors will be a clear signal that these investors are not wanted. The result will be to minimise this sector of the market and to therefore reduce housing supply.
The Urban Taskforce believes that increasing supply is the key game changer that is needed to help with housing affordability and that this can be done by speeding up housing planning approvals and by minimising extra costs being put on developers by councils and state government agencies.
We recently asked our developer members for examples of where housing projects were stuck in the planning system and were surprised to get a list adding up to around 40,000 new homes that were in limbo.
These projects need to be speeded up to lift housing supply for Sydney. The Department of Planning says an average of 36,000 new homes a year is needed in Sydney over 20 years so in boom times we should be over 40,000 new homes a year. The best performance to-date has been 34,000 so clearly Sydney needs many more new homes.
It is concerning that in the media release by NSW Labor, Shadow Treasurer Ryan Park refers in a negative way to ‘developer mates’. The only industry that is going to provide the massive number of new homes needed for Sydney is the developers but they have to battle a slow and complex planning system and manage as a result holding costs that can reach $500,000 a month for large projects.
The Urban Taskforce is keen to be involved with all political parties in discussions on housing supply and affordability in a positive and constructive manner.
Chris Johnson is chief executive officer of property development industry group Urban Taskforce and can be contacted <a href="https://www.urbantaskforce.com.au/index.php?option=com_content&amp;view=article&amp;id=97&amp;Itemid=126#.Vdaart55dFI" target="_blank">here</a>.
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NSW Labor housing proposals will slow supply: Chris Johnson

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GUEST OBSERVER
The Housing Industry Association, the voice of Australia’s residential building industry supports the Turnbull Government’s focus on first home buyer access and reducing the costs of new housing supply.
Housing affordability is a dominant policy issue in 2017, but it is also a complex one.
A suite of policies to address low housing affordability is required and these policies need to come from the Federal government, state governments, and from cooperation between the two levels.
Changes to negative gearing (and capital gains tax) are not the appropriate policy focus to addressing Australia’s housing affordability challenge. Reducing the cost of new housing supply and tackling the deposit gap faced by aspiring first home buyers is the appropriate core focus.
In this regard a ‘bond aggregator’ model to increase public and social housing supply is a good start. Consideration of allowing first home buyers to access super savings to support a housing deposit is another policy worthy of debate.
A well-designed housing infrastructure fund must also be part of the Federal government’s consideration. A Federal government-backed policy to reduce the price of non-essential infrastructure currently being paid for by new home buyers would play a crucial role in reducing the cost of new housing supply. 
Independent research conducted for HIA by Independent Economics, using the same model as that used by Commonwealth Treasury, provides compelling evidence that amending negative gearing provisions would be a retrograde step as it would reduce both Australian living standards and housing affordability.
In an ‘ideal’ world the two keys to fully addressing Australia’s housing affordability challenge are boosting residential land supply and eliminating stamp duty on residential property conveyances.
Both represent large policy challenges, and can be achieved with cooperation between state governments and the Federal government.
The Henry Tax Review ‘blueprint’ correctly recognised that reforms to housing supply and housing assistance need to come before everything else. Consideration of any policies to amend negative gearing or capital gains tax concessions forget this important finding, provide false hope to aspiring home buyers, and will lead to a deterioration in housing affordability. 
Kristin Brookfield is the Chief Executive Industry Policy at the Housing Industry Association (HIA). You can contact her <a href="https://hia.com.au/IndustryPolicy/PolicyTeam.aspx" target="_blank">here</a>.
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